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What’s happening: Shares of Broadcom declined in after-hours trading on Thursday, following the release of the company’s fiscal third-quarter results.
What happened: The semiconductor company reported better-than-expected sales and earnings for the latest quarter.
However, Broadcom’s sales forecast for the fourth quarter came slightly below market expectations.
How were the results: The Palo Alto, California-based company reported double-digit growth in sales for the quarter.
Why it matters: Broadcom’s broadband revenues contracted by 49% in the fiscal third quarter, with non-AI networking declining 41%. On a GAAP basis, the company reported a quarterly loss of $1.88 billion, versus a year-ago profit of $3.30 billion, due to $4.5 billion in one time tax provisions.
Broadcom generated cash from operations worth $4.963 billion and free cash flow of $4.791 billion during the quarter, while ending the recent quarter with $9.952 billion in cash and cash equivalents.
Investors are generally bullish about AI and expect there to be healthy demand for semiconductor chips in the foreseeable future. However, Broadcom issued its fourth quarter outlook short of market estimates, after AI-chip leader Nvidia recently issued softer quarterly projections.
Broadcom guided to revenues of around $14 billion and adjusted EBITDA of about 64% of projected revenue for the fourth quarter. The company increased its full-year outlook for AI revenues to $12 billion, from its previous projection of $11 billion. The full-year total revenue guidance was lifted to $51.5 billion, from the earlier forecast of $51 billion.
The board also announced a quarterly cash dividend of 53 cents per share.
How shares responded: Broadcom’s shares fell 6.7% to $142.53 in the extended trading hours on Thursday, following the release of the quarterly results. The stock has jumped by around 41% year to date.
What to watch: Investors will continue monitoring rising demand for AI chips, which is expected to drive the company’s results ahead.
Context: The CAD/USD forex pair edged higher on Friday, as investors assessed the latest economic data.
Details: Data released on Thursday showed Canada’s S&P Global services PMI increasing to 47.8 in August, from 47.3 in July. Despite the improvement, the figure signalled the third straight month of contraction in the country’s services sector.
The S&P Global composite PMI edged higher to 47.8 in August, versus 47.0 in the prior month.
During its latest meeting, the Bank of Canada had cut interest rates by 25 basis points (bps) to 4.25%. Markets expect further rate cuts ahead.
A rise in the price of crude oil, one of Canada’s major exports, provided further support to the loonie. WTI crude oil prices gained around 0.3% to close at $69.35 per barrel.
Some weakness in the US dollar sent the CAD/USD forex pair higher. The US dollar index, which measures the greenback’s performance versus a basket of major peers, shed 0.06% to reach 101.05.
The CAD/USD forex pair edged higher to 1.3502 this morning. The S&P/TSX Composite Index had lost 0.23% to close at 22,988.28 on Thursday.
What to watch: Investors await the release of jobs data from Canada today. Analysts expect Canada’s unemployment rate to rise to 6.5% in August, from 6.4% in July. The country is expected to add 26,500 jobs in August.
Data on Canada’s Ivey Purchasing Managers Index and US nonfarm payrolls will also remain in focus today.
Other Markets: US trading indices closed mixed on Thursday, with the Dow Jones index and S&P 500 down by 0.54% and 0.30%, respectively, and the Nasdaq 100 up by 0.05%.
Russia’s Ministry of Defence said that the country’s military forces had taken control of the Prechystivka and Karlivka settlements in Ukraine. The news sent the RUB/USD pair higher in forex trading this morning.
The Philippines said its manufacturing production grew by 4.7% year-over-year in July, versus a 3.3% gain in the prior month, lending support to the PHP/USD forex pair.
Japan’s reserve assets rose to $1.24 trillion in August, from $1.22 trillion in the prior month. The country’s foreign reserves surging to the highest level in four months sent the JPY/USD pair higher in forex trading this morning.
South Korea’s current account surplus shrank to $9.13 billion in July, from $12.26 billion in the previous month. Despite the decline, the figure coming in higher than market estimates of $9.00 billion lent support to the KRW/USD forex pair.
US crude oil inventories fell by 6.9 million barrels in the last week of August, higher than market estimates of a decline of 1.1 million barrels, which sent WTI crude oil prices higher this morning.
Germany’s balance of trade and industrial production, South Africa’s foreign exchange reserves, UK Halifax house price index, France’s balance of trade, industrial production and current account, Italy’s retail sales, Eurozone’s GDP growth rate and employment change, Singapore’s foreign exchange reserves, India’s bank loan growth, deposit growth and foreign exchange reserves, Mexico’s auto exports and car output, US nonfarm payrolls, unemployment rate, average hourly earnings, Baker Hughes crude oil rigs, Baker Hughes total rigs and total vehicle sales, Turkey’s treasury cash balance, Japan’s foreign exchange reserves, Russia’s total vehicle sales, as well as Spain’s consumer confidence.
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